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LGA warns over financial 'cliff-edge'

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Ministers must reduce the pace of funding cuts over the next two years or risk some councils going over a “cliff-edge”, the Local Government Association has warned.

The call comes in light of the uncertainty over the move to 100% business rates retention which LGA senior vice chair Nick Forbes (Lab) said had left councils in a position of “double jeopardy”, facing huge cuts over the next two years and with no idea of how they would be funded beyond 2020.

The association is urging the government to act when it publishes the local government finance settlement this week.

Nick forbes

Nick forbes

Nick Forbes

Cllr Forbes said: “Our communities and the local services they rely on cannot take another two years of funding cuts with no solution in sight. The local government finance settlement must put this right.

“Smoothing out funding cuts over the next few years, introducing a fairer funding system and allowing local government to keep every penny of business rates collected to plug funding gaps is now the only way the government can ensure local authorities are able to protect the services communities rely on over the next few years.”

The LGA is also calling on the government to use the settlement to fully fund the restructuring of the national pay spine, required as a result of the introduction of the national living wage, and to publish the planned fair funding review consultation which was originally expected in July.

The association is also asking ministers to commit to not making any further changes to new homes bonus payments. This year £240m of new homes bonus funding was diverted to fund social care. In a technical consultation paper on the 2018-19 financial settlement, published in September, the Department for Communities & Local Government said it was considering “withholding” new homes bonus payments from councils which are “not planning effectively for new homes from 2018-19”.

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